Reviewing Bank Statements for Non Payroll Deposits
Back in the day, it wasn't uncommon for an underwriter to ask for an explanation as to an out of the ordinary, large deposit, into a borrower's bank account. The underwriter would ask for this explanation to determine there were not non seasoned funds in an account that perhaps were borrowed monies.
Well, flash forward to the new world of mortgage lending and underwriting standards. Boy have things changed. Many investors are now requiring an explanation and paper-trail on any deposit that is non payroll related. While just the other day I had to have some clients explain and paper-trail a non payroll deposit of $1002.80. Fortunately, they were able to access their online account and pull up the details of that transaction. $1000.00 was actually a refund of an Earnest Money Deposit on a transaction that didn't go through in addition there was a $1.86 check for a refund from their previous gas company as well as a refund check of .94 cents which was a refund from their previous electric company.
While it may be difficult for our clients to live in "our new mortgage world" preparing them and educating them during the process will ultimately lead to a cleaner and less frustrating transaction.
I encourage Realtors and lenders alike, that at the beginning of the home buying and lending process to please set these expectations for your clients. I promise you, in the end, there will be one less headache to deal with.